Thursday, April 11, 2013

Florida judge slows down multi-patent case that's more important to Google than to Apple

Google's efforts to leverage Motorola's patents against Apple and Microsoft have gone nowhere so far, and this week it has suffered two significant setbacks. Yesterday a German appeals court suggested to Google that it stipulate to a stay of its push email case against Apple's iCloud, which is likely going to be ordered now in two weeks' time, thereby lifting the only injunction Motorola is presently able to enforce against Apple anywhere in the world (it never got to enforce any against Microsoft). Also yesterday, an order entered the electronic docket of a Motorola v. Apple two-way multi-patent case in the Southern District of Florida. The order had been signed the day before (April 9). Judge Robert N. Scola denied the parties a jointly-requested case management conference to help them with narrowing the case, and pushed back the claim construction process by approximately four months (likely resulting in a similar delay for the case as a whole, which the order does not address).

Motorola had started the Miami litigation in 2010 over six patents (including the unfathomable push notification patent that is going down the tubes in Germany and was considered invalid for multiple independent reasons in the UK), and Apple counterclaimed over as many patents of its own. The case became inflated last year because Motorola, with Google's approval that was without a doubt contractually required while the "Googlorola" acquisition was under antitrust review, filed a second Florida case against Apple over the same patents but targeting newer products and services (iPhone 4S, iCloud). Apple counterclaimed over six more patents and even added HTC to the lawsuit as another defendant. Motorola then asserted six more patents for the sake of balance. The second Florida case got consolidated into the first one, and even though the HTC part was at some point severed and transferred to Delaware (and settled anyway), the result was a much larger case for the court to handle. If Google and Motorola had been more patient, they actually could have had a trial in 2012. Now there's a 2014 trial date, and with the latest order, further delay is possible.

The impact of the delay is asymmetrical. It hurts Google a lot; for Apple it's great news at best and neutral at worst. Here's why:

When Google announced that it would pay $12.5 billion for Motorola Mobility, it said that it was going to use Motorola's patents to "protect Android" against Apple and Microsoft. In this context, "to protect" means "to countersue" in order to force a settlement. If Google wants Apple to refrain from patent assertions against the Android ecosystem at large (particularly Samsung, but also other device makers whom Apple could sue anytime), it needs to get so much leverage out of Motorola's patents that Apple decides it's better to have everyone go home. But how, when and where will Motorola get that leverage? This Florida lawsuit is a case that Motorola, even long before Google bought it, had been pursuing as a high-priority action, knowing that the Southern District of Florida can be faster than many other U.S. districts. This is the only U.S. federal lawsuit in which Motorola is asserting non-standard-essential patents against Apple -- meaning it's free to seek an injunction regardless of SEP-specific antitrust considerations. The other federal patent infringement case is the "Judge Posner case" that is currently on appeal, and all of Motorola's patents in that one are/were SEPs. Also, there's an ITC investigation of a Motorola complaint against Apple, most parts of which have already failed (but are on appeal). The only patent still pending at the ITC, barely alive after a recent remand order, is a sensor-related patent.

Obviously, Google's strategy makes a settlement with Apple far more difficult to achieve than if Motorola Mobility could negotiate a deal taking care only of its own interests, without regard to the wider Android ecosystem including Samsung and dozens of other players.

For Apple, Motorola isn't really the most important target. Its market share is small compared to Samsung's, and it's unlikely to become more significant in the future. Apple just doesn't want to come under so much pressure from Motorola that it has to enter into a global settlement with Google benefitting the entire Android ecosystem.

Apple has some reasonably good patents in play in Florida. It's fairly possible that when all is said and done, Apple gets more leverage out of the Miami case than Google. It could be that if a fortune teller could inform both parties today of what the outcome of this case will be, Apple would be the party pushing for quick resolution, and Google would be stalling. But with all the imponderabilities of patent litigation, and with Apple's priority being on the Samsung dispute, any delay is probably just fine with Apple -- as long as the judge doesn't blame Apple for stalling but blames Apple and Google to the same extent, which is exactly what he's doing. For Google, any delay means that it becomes harder and harder to make good on its promise to "protect" the wider Android ecosystem with Motorola's patents.

The judge is not amused that the parties can't at least narrow their case now, after having inflated it so much. In his order he rebukes Apple and Google for "obstreperous and cantankerous conduct" (I had to look up a dictionary for those two adjectives) and even accuses them of "using this and similar litigation worldwide as a business strategy that appears to have no end". Other judges in other high-profile smartphone patent cases have said similar things. And they usually scold both parties at the same time. I wouldn't overrate that part. Even judges have to vent frustration every once in a while, and the Florida court actually would have been willing to take the original case (before Google and Motorola wanted too much at once) to trial last year.

Here's the order (this post will continue below the document):

13-04-09 Order Denying Case Management Conference and Extending Markman Deadlines

The order adjudges a motion Apple and Google's Motorola brought on March 25. In the motion, they note that there are still 22 patents at issue: 12 Motorola patents and 10 Apple patents. Apple had sort of withdrawn two of its 12 asserted patents ("sort of" because it might re-raise them if an appeals court overturns an unfavorable claim construction). But they couldn't agree on any further narrowing and asked the court for help. The hearing would have been a conference call following some briefing. The motion itself didn't contain any indication on the parties' positions and how the court could help.

Claim construction was decided with respect to the first six patents each party asserted. It's still needed for the ones asserted last year. Without claim construction, it's hard for parties to figure out which patents are likely to be deemed infringed or invalid. But if the parties can't narrow their case, then the court has to construe over 100 terms from 180 claims from the 12 patents asserted in 2012. That's what Judge Scola is not quite prepared to do. He wants the parties now "to narrow the case to a manageable scope themselves". Otherwise, he "forewarns them that [the court] intends to stay the litigation while the [claim construction] issues are pending and issue a decision as expeditiously as the parties deserve" (meaning things will be delayed because the parties deserve it if they don't narrow the case).

Again, this has asymmetrical implications for the parties. Just like Samsung generally tries to stall Apple's lawsuits, Apple is now in a position in Florida where it wouldn't care about a delay -- if anything, it would appreciate it. But this doesn't mean that Apple can just decline to engage in any narrowing effort. The name of the game now is for Apple to appear to be equally constructive as Google (otherwise the court could, for example, sever Apple's case and put Google's assertions on a faster track). Since Apple has already dropped a couple of patents (even if it reserved the right to reassert after a successful appeal), the ball is now in Google's corner. I guess the push notification patent is a likely one to be dropped after its failure in Europe. But Google needs to drop a few more if it wants to address the court's concerns about an unmanageable case. Then Apple would have to drop a similar number or state valid reasons for which the withdrawal of a smaller number has the same case-narrowing effect as Google's concessions. Alternatively, Apple could up the ante and offer to drop a number of patents in order to then put the pressure on Google to do the same. For example, Apple could propose that each party take only three patents to trial. If Google agreed to it, there wouldn't be much of a delay, but Apple would have to fend off only three patents (quite achievable given the usual drop-out rate in these disputes). For Apple, the current situation is almost like "heads, I win; tails, you lose". For Google, the question is what it spent $12.5 billion on.

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